REG - Mitsubishi Elect. - Statement re (power generator systems business)

Mitsubishi ElectricAnnouncement

28/12/2022 07:00

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RNS Number : 9645K  Mitsubishi Electric Corporation  26 December 2022

 

Mitsubishi Electric and Mitsubishi Heavy Industries Reach a Basic Agreement to
Start Detailed Studies for Business Integration for Power Generator Systems

 

 

TOKYO, December 26, 2022 - Mitsubishi Electric Corporation (TOKYO: 6503,
"Mitsubishi Electric") and Mitsubishi Heavy Industries, Ltd. (TOKYO: 7011,
"Mitsubishi Heavy Industries") announced today that the two companies have
reached a basic agreement to establish a joint venture to integrate their
businesses in fields focused on power generator systems.

It is expected that Mitsubishi Electric will be the majority shareholder and
Mitsubishi Heavy Industries will be the minority shareholder of the new
company.

Climate change caused by global warming has emerged as a common issue
worldwide, and efforts to achieve carbon-neutrality, which would reduce
greenhouse gas emissions to net zero, are accelerating around the world.

Electricity demand is expected to increase due to economic growth mainly in
emerging countries and awareness of energy security, and energy transitions
has increased. In the future, existing thermal power generation will
decarbonize its systems with fuel conversion to hydrogen, ammonia, and other
carbon-free fuels.

Large-scale power plants that have supported the power infrastructure so far
will play an important role as a force to adjust for the increase in variable
renewable energy sources, whose power generation is affected by weather and
other factors.

Considering this market environment, Mitsubishi Electric and Mitsubishi Heavy
Industries have reached this basic agreement to strengthen their market
competitiveness further by integrating their respective businesses and
combining their respective technologies and assets. This business integration
will create a stronger partnership than ever before and expand the two
companies' power generator systems on a global scale, thereby contributing to
the realization of a carbon-neutral society.

An overview of this business integration is described in the Appendix. Further
details will be announced as they become available.

 

Media inquiries

Mitsubishi Electric Corporation

Public Relations Division

prd.gnews@nk.MitsubishiElectric.co.jp

Mitsubishi Heavy Industries, Ltd.

Corporate Communication Department

mediacontact_global@mhi.com

 

Overview of Business Integration

(1)Scope of the business integration

The scope of the integration will include basic planning, design, development,
manufacturing, sales and servicing of power generators connected directly to
turbines, as well as other key facilities at power generation plants.

(2)Measure of integration

Businesses subject to the integration will be transferred to a new joint
venture company from Mitsubishi Electric and Mitsubishi Heavy Industries
separately, each by way of an absorption-type company split. The terms and
conditions of the integration will be determined by Mitsubishi Electric and
Mitsubishi Heavy Industries in the definitive agreement on the integration.

(3)Overview of the parties to the integration

 Company name                                           Mitsubishi Electric Corporation                                     Mitsubishi Heavy Industries, Ltd.
 Head Office                                            2-7-3 Marunouchi, Chiyoda-ku, Tokyo                                 3-2-3 Marunouchi, Chiyoda-ku, Tokyo
 Representative                                         Kei Uruma                                                           Seiji Izumisawa

                                                        Representative Executive Officer,                                   President & CEO

                                                        President & CEO
 Summary of Business                                    Development, manufacturing, sales, and service of products such as  Major products and operations: Energy Systems, Plants & Infrastructure
                                                        Infrastructure, Industry and Mobility, Life and Business Platform   Systems, Logistics,

                                                                                                                            Thermal & Drive Systems, Aircraft, Defense & Space
 Established                                            January 15, 1921                                                    January 11, 1950
 Paid-in Capital                                        175,820 million yen                                                 265,608 million yen

(as of March 31, 2022)
(as of March 31, 2022)
 Shares Issued                                          2,147,201,551 shares                                                337,364,781 shares

(as of March 31, 2022)
(as of March 31, 2022)
 Book Closing Date                                      March 31                                                            March 31
 Major Shareholders and                                 The Master Trust Bank of Japan, Ltd. (Trust Account): 16.91%        The Master Trust Bank of Japan, Ltd. (Trust Account): 15.61%

Shareholding Ratio

                                                        SSBTC CLIENT OMNIBUS ACCOUNT: 5.03%                                 Custody Bank of Japan, Ltd. (Trust Account): 5.06%

                                                        Custody Bank of Japan, Ltd. (Trust Account): 4.63%                  Meiji Yasuda Life Insurance Company: 2.37%

                                                        (as of March 31, 2022)                                              (as of March 31, 2022)
 Operating Results for the Most Recent Business Year and Financial Positions as
 of the End of the Business Year

(FY ended March 2022)
 Total Equity                                           3,097,397 million yen                                               1,662,529 million yen
 Total Assets                                           5,107,973 million yen                                               5,116,340 million yen
 Equity Attributable to                                 1,409.08 yen                                                        4,696.42 yen

 Shareholders per Share
 Revenue                                                4,476,758 million yen                                               3,860,283 million yen
 Operating Profit                                       252,051 million yen                                                 -
 Profit from Business Activities                        -                                                                   160,240 million yen
 Profit Before Income Taxes                             279,693 million yen                                                 173,684 million yen
 Net Profit Attributable to Shareholders                203,482 million yen                                                 113,541 million yen
 Basic Earnings per Share Attributable to Shareholders  95.41 yen                                                           338.24 yen

 

(4) Overview of the new joint venture company

It is expected that Mitsubishi Electric will be the majority shareholder and
Mitsubishi Heavy Industries will be the minority shareholder of the new
company. Details of the new joint venture company, including the investment
ratio, will be decided through due diligence and further discussions.

 

(5) Timeline

December 26, 2022 Execution of basic agreement

Late May 2023 (planned) Execution of definitive agreement

April 1, 2024 (planned) Closing

 

* Implementation of the planned business integration is conditional upon
obtaining clearances, approvals and/or completion of processes required from
and by any relevant government agencies

and competition authorities.

** Since both absorption-type company splits of Mitsubishi Electric and
Mitsubishi Heavy Industries constitute simple absorption-type splits as set
forth in Article 784, Paragraph 2 of the Companies Act of Japan, it is not
expected that approvals of shareholders' meetings will be required at
Mitsubishi Electric or Mitsubishi Heavy Industries.

 

(6) Outlook

The impact of the business integration on the business results of Mitsubishi
Electric and Mitsubishi Heavy Industries will be announced when it becomes
clear

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